Environmental NGOs Seek to End World Bank Climate Fund

WASHINGTON, DC, April 19, 2004 (ENS) - Eighty environmental and social justice organizations today delivered a letter of protest to the World Bank, calling for the closure of its four year old greenhouse gas reduction mechanism, the Prototype Carbon Fund. The groups are sure to raise the issue at protests ahead of the World Bank and International Monetary Fund 60th anniversary spring meeting April 24 - 25 in Washington, DC.

The groups, who identify themselves as "teachers, scholars, activists, scientists, students, Indigenous peoples, landless people, peasants, NGOs, and others from the North and South," say they "do not recognize the legitimacy of the World Bank’s Prototype Carbon Fund."

The Prototype Carbon Fund (PCF) invests financial contributions made by companies and governments in projects designed to reduce the emission of greenhouse gases. These gases, emitted by the burning of coal, oil and gas, form a blanket in the Earth's atmosphere that traps the Sun's heat close to the planet, causing rising sea levels, extreme weather events, droughts and the spread of tropical diseases.

PCF projects operate within the flexible mechanisms of the Kyoto Protocol. Participants can acquire emission reduction units by financing projects that reduce emissions - either in an industrialized country through the Joint Implementation mechanism, or in a developing country through the Clean Development Mechanism.

In their letter, the groups state that the Prototype Carbon Fund is "destructive greenwash" and instead of solving problems has "exacerbated existing human rights violations and furthered environmental destruction."

They point to the Plantar project that is planting 23,100 hectares of eucalyptus trees in a rural area of Minas Gerais, southeastern Brazil, as an example of how the Prototype Carbon Fund is going wrong.

The Plantar project is expected to create emission reductions by avoiding a fuel switch from charcoal to coal in pig iron production. Plantar S.A. Reflorestamentos, founded in 1967, is a private company whose shareholders are members of the Moura family. It is growing eucalyptus timber for charcoal production on its own lands to supply its own iron works.


Pig iron production ovens in Brazil (Photo courtesy World Rainforest Movement (WRM))
The Plantar company says, ""One ton of foundry pig iron produced with coal releases 1.8 ton of carbon dioxide, while with charcoal it sequesters 1.1 ton."

In addition, the Plantar project is the first project seeking credit through the Clean Development Mechanism as a carbon sink. The eucalyptus plantations are expected to absorb the greenhouse gas carbon dioxide, keeping it out of the atmosphere. The plantations are independently certified by the Forest Stewardship Council as well managed.

The World Bank says the Plantar project will promote sustainable development by reducing pressure on the native forest and conserving biodiversity under the Clean Development Mechanism.

But the groups say the project involves the expansion of monoculture eucalyptus plantations "originally established by forcibly evicting geraiszeiros peoples from the land." Geraiszeiros are inhabitants of the dry forest ecosystem of the central Brazil plateau known as the cerrado. Since the evictions, the groups allege, the plantation's owners have created "slave-like conditions."

To back that allegation, the groups cite a 1994 Brazilian Parliamentary Investigation Commission which verified the practice of slave labor on the property of Plantar and other forest companies. This finding is reviewed in an evaluation report on Forest Stewardship Council certification of the Plantar eucalyptus plantations written by a research team for the World Rainforest Movement based in Uruguay, one of the 80 groups that signed the letter to the World Bank.

In addition to the labor conditions, the groups say Plantar plantations have "heavily polluted surrounding water sources, thus devastating the livelihoods of local farmers and fisherfolk."

On top of the impacts upon the local environment and peoples, the verifier of the carbon credit scheme, the Norwegian company Det Norske Veritas, has stated that there is no guarantee that the project actually will have a permanent positive effect on the climate.

Marcelo Calazans from local Brazilian organization FASE-ES says, "This and many other projects have terrible negative impacts on local people and environments and it is still unclear if there is any real benefits for the climate. We believe that the Prototype Carbon Fund should cease operations and close down immediately."


Eucalyptus plantation in Brazil (Photo courtesy WRM)
The World Bank views the Plantar project as a step towards sustainable development. In addition to reduced greenhouse gas emissions, the Plantar project "will reduce the pressure on endangered native cerrado forests, currently being decimated for charcoal used in the Brazilian pig iron industry," the Bank says in its project description.

Traditional small scale producers of pig iron in Brazil use charcoal in blast furnaces with an annual output of about 100,000 tons of pig iron per year. In the 1960s and 1970s, as the Brazilian pig iron industry boomed, several million hectares of native dry cerrado forests were cleared to produce charcoal, reducing drylands forest ecosystems, and expanding the area under low yielding pasture, resulting in degraded soils and hydrology.

Subsidies for fuelwood plantations were introduced in the 1960s to take the pressure off native forests, but proved to be expensive and economically inefficient and were discontinued in the 1980s.

As a result, fuelwood plantations are being depleted and pressure on native forests has increased again. The shortage of planted biomass is causing small scale pig iron mills to close down, leading to increased rural unemployment, the Bank explains. The Plantar project has created around 1,200 full time jobs in the rural area of Minas Gerais, and leverages additional social welfare programs.

In the absence of the Plantar Project, Plantar would be unable to maintain charcoal based pig iron production and would be forced to close its blast furnace operations when its current plantations are exhausted by 2008, the Bank states, resulting in loss of jobs in plantation maintenance and pig iron manufacture.

The Plantar company has agreed as part of the PCF Project to monitor and report on preventative health measures and health care provided to charcoal workers, the Bank says.


For 11 years Plantar has been developing a program of eucalyptus clones. Currently, the company produces six million cloned trees per year. (Photo courtesy Plantar SA )

Plantar produces its eucalyptus trees by cloning superior trees, a process it says allows the company to avoid deforestation by using only 10 percent of the area previously required to achieve the same yield.

"For each 100 hectares of the forests for production,the company says, "at least 20 hectares of indigenous forests are kept in order to preserve the flora, fauna, headwaters and water streams."

The groups disagree, saying the water sources have dried up or are polluted due to the eucalyptus plantations, as documented by the World Rainforest Movement in its evaluation report on the Forest Stewardhsip Council certification of Plantar.

The PCF’s support for the Plantar Project aims to demonstrate how carbon finance for well managed forests - made possible by the Kyoto Protocol’s Clean Development Mechanism - can reduce destruction of native forests, help conserve their unique biodiversity, help preserve local community use of forest fruits and other non-timber products, and secure high quality employment in rural areas with few other employment opportunities.

But the environmental NGOs say in their letter to the Bank that the Prototype Carbon Fund "is not a mechanism for mitigating climate change" because it allows the industrialized North to continue business as usual, thus impacting the planet’s climate and it obstructs "the necessary change" from fossil fuels to climate friendly renewable energy sources that the groups term" socially just."

It legitimizes a market for "an indefinable 'commodity' which claims to consist of greenhouse gases or pollution, but in fact cannot be reliably described, quantified or verified," the groups say.

"It is neither carbon nor pollution that is being traded," the groups say, "but people’s lives and paper certificates claiming to be carbon credits."